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Thread: California approaching 'crunch time' ...

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    Banned Melonie's Avatar
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    Default California approaching 'crunch time' ...

    as you know, during the recent special election a large majority of California voters refused to support additional state tax increases. As a result, the s#!t is now hitting the proverbial fan i.e. California is unable to raise more tax revenues via tax increases, California is unable to 'borrow' additional money at affordable interest rates via new muni bond issues after Obama ran into a 'headwind' re federal guarantees for California debts thus California's credit rating is now the worst of any US state, so as a result California is FINALLY being forced to cut actual levels of state / local gov't spending.




    (snip)Officials in Sacramento began to bore in on the crisis Thursday, with the nonpartisan legislative analyst saying the deficit may already have ballooned to $24 billion and offering skepticism about some of the administration's plans for closing the gap.

    At the same time, lawmakers and the governor had to contend with negative signals from Washington, where officials offered little hope they would agree to guarantee billions in emergency short-term loans, even if massive spending cuts can be quickly enacted.

    It added up to a sense of anxiety as lawmakers rushed to cobble together a spending plan before the state runs short of the cash it needs to pay bills in July.

    To balance the books, Schwarzenegger is eyeing the dismantling of the state's CalWorks program, which serves more than 500,000 poor families with children, as well as the elimination of Healthy Families, which provides medical coverage to 928,000 children and teens. Mothballing the two programs would save the state about $1.4 billion in the coming fiscal year, officials said.

    If the proposals to slash the safety net come to pass, they would completely reshape the state's social service network, transforming California from one of the country's most generous states to one of the most tightfisted in aiding the poor.

    Also potentially on the chopping block is CalGrants, a financial assistance program that offers cash grants to lower- and middle-income college students each year. The governor's proposal would eliminate the 77,000 new grants awarded each year at a cost of $180 million, but that saving would eventually grow to more than $900 million as students graduated and the program was phased out.

    Schwarzenegger is considering big cuts to other programs and departments as he struggles to downsize state government after Tuesday's voter rejection of nearly $6 billion in funding measures.

    Among the possibilities is a 10% reduction in court funding as well as slashing $600 million from state universities and $750 million from the state prisons, mostly from programs designed to rehabilitate inmates."(snip)

    ~
    Last edited by Melonie; 05-24-2009 at 08:24 AM.

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    Default Re: California approaching 'crunch time' ...

    with some commentary as to what the 'California crunch' will REALLY entail !

    (snip)Of course California is known for having "sanctuary cities", $200,000 pensions for firefighters and in general providing largess to everyone - even those who aren't citizens.

    This is a problem, of course, but it didn't bother all the bleeding hearts so long as all the high-flying people out there were flipping houses and running up their credit cards.

    Now, of course, the credit card is dead and the home is being foreclosed on, much like the rest of the nation as a whole - but of course the Federal Government can run deficits so long as it can con China - California can't.

    Its time to set an example here folks:

    No more "freebies" for illegals. Period. No free medical care, no free schools, not even jailing people - you get caught here illegally you get sent home. Period, end of discussion, full-stop. Start right now and enforce the damn law; a HUGE percentage of California's prison population are in fact illegal aliens. We pay twice - first for the crime, then again to jail them. Stop being stupid.

    Stop paying civil service jobs (firefighters, teachers, etc) $100,000+, more than twice the per-capita income.
    Fix the pension system so it can't be gamed and double-dipped to the tune of $200,000+ for that same firefighter when they retire.

    Stop subsidizing people who want to have 8 embryos IVF'd into their uterus when they can't personally cover the cost of BIRTHING those eight new mouths, never mind attempting to raise them.

    If you're "poor" and need help, make receiving that help conditioned on working. If nothing else I bet there's a bunch of trash alongside roads that needs to be picked up. If you're able-bodied, no help without working in exchange - for the general benefit of society. Period.

    What's happening here is entirely predictable and in fact has been predicted. You can't spend more than you make for very long; eventually your credit card comes back "declined."

    California is first in this regard but won't be the last.

    Wake up America.

    And in the meantime (and as a hedge if the government tries to be even more stupid) go buy a gun and some ammo. When the "entitlement" checks stop going to those who think they have a right to pop out eight kids and bill the state for the medical, I'll make book on riots and other forms of general civil nastiness."(snip)

    from

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    Default Re: California approaching 'crunch time' ...

    Or in simpler terms: stick it to the poor people, and buy a gun in case they get uppity.

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    Default Re: California approaching 'crunch time' ...

    The State of Jefferson is a go!
    In 3
    2
    1!

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    Default Re: California approaching 'crunch time' ...

    For once , Obama got it right. When Ahnold came to D.C. hat in hand looking for Federal guarantees of Cali's debt he received a very cold reception and a flat : "NO ".

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    Default Re: California approaching 'crunch time' ...

    ^^^ for the record, there really wasn't a choice. The US constitution essentially bars the federal gov't from assuming responsibility for debts owed by individual states. However, throwing the fine print of the Constitution out the window hasn't seemed to be a problem for Obama so far i.e. the GM / Chrysler bailout versus the Constitution's 'takings clause' as it applies to secured GM / Chrysler bondholders.

    At any rate, a much more practical issue probably influenced Obama's 'nyet' ... the fact that the federal gov't assuming municipal bond guarantees / originating federally funded loans for the state of California would immediately lead to 43 other states with deep budget deficits forming a line right behind them ! Add this to international financial community speculation that the US federal gov'ts AAA credit rating is already on shaky ground (without liabilities for states' even shakier bonds / loans beginning to appear on the federal balance sheet), and the consequences of existing US federal debt service costs rising by $100 billion + ( along with every other US interest rate rising as a result), and a 'pits of hell' scenario would surely accompany any federally funded California bailout attempt. Obama may be many things, but stupid isn't one of them.

    As a result of the federal refusal, California will now be forced to 'pay the piper'. It will be curious to see how the mix of necessary tax increases, social welfare benefit reductions, teacher / police / prison system reductions, 'green' subsidy reductions etc. get laid out ... and how the states taxpayers, unionized gov't employees, 'green' industries, welfare recipients etc. react ! ( hint hint California Prius buyers, your $4000 state tax credit is likely to have just disappeared !)

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    Default Re: California approaching 'crunch time' ...

    Quote Originally Posted by Melonie View Post
    ^^^ for the record, there really wasn't a choice. The US constitution essentially bars the federal gov't from assuming responsibility for debts owed by individual states. However, throwing the fine print of the Constitution out the window hasn't seemed to be a problem for Obama so far i.e. the GM / Chrysler bailout versus the Constitution's 'takings clause' as it applies to secured GM / Chrysler bondholders.

    At any rate, a much more practical issue probably influenced Obama's 'nyet' ... the fact that the federal gov't assuming municipal bond guarantees / originating federally funded loans for the state of California would immediately lead to 43 other states with deep budget deficits forming a line right behind them ! Add this to international financial community speculation that the US federal gov'ts AAA credit rating is already on shaky ground (without liabilities for states' even shakier bonds / loans beginning to appear on the federal balance sheet), and the consequences of existing US federal debt service costs rising by $100 billion + ( along with every other US interest rate rising as a result), and a 'pits of hell' scenario would surely accompany any federally funded California bailout attempt. Obama may be many things, but stupid isn't one of them.

    As a result of the federal refusal, California will now be forced to 'pay the piper'. It will be curious to see how the mix of necessary tax increases, social welfare benefit reductions, teacher / police / prison system reductions, 'green' subsidy reductions etc. get laid out ... and how the states taxpayers, unionized gov't employees, 'green' industries, welfare recipients etc. react ! ( hint hint California Prius buyers, your $4000 state tax credit is likely to have just disappeared !)
    The squealing of the stuck pigs and mooing of the sacred cows can be heard all the way over on this coast. California has spent it"s way into this problem and will have to "CUT" it"s way out.

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    Default Re: California approaching 'crunch time' ...

    and to add even more 'surprises' to the list ...



    if Obama's assault on offshore tax havens turns into a reality, it is likely to prompt a whole bunch of California based software companies to make a hasty exit !

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